LONGUEUIL, QUEBEC -- (Marketwired) -- 02/12/16

Heroux-Devtek Inc. (TSX:HRX), ("Heroux-Devtek" or the "Corporation"), a leading international manufacturer of aerospace products, today reported its results for the third quarter of fiscal 2016 ended December 31, 2015. Unless otherwise indicated, all amounts are in Canadian dollars.

"Heroux-Devtek achieved a strong profitability increase in the third quarter driven by higher commercial volume, efficient cost management and favourable currency variations. Commercial sales remained robust reflecting our greater reach in the large aircraft market and the production ramp-up of certain programs for which we designed landing gear systems, while certain delayed deliveries and lower requirements led to a reduction in defence sales," said Gilles Labbe, President and CEO of Heroux-Devtek.

"During the quarter, Heroux-Devtek continued to progress towards meeting production requirements and delivery schedules in regards to the B-777 and B-777X contract. We also renewed three important contracts that attest to our solid reputation and longstanding relationships. In December, we extended a preferred supplier agreement with a leading systems manufacturer for a five-year period through the end of calendar 2023 to manufacture major, complex landing gear components for three large commercial aircraft programs. We also renewed through September 2021 a contract with the U.S. Air Force for landing gear repair and overhaul services, as well as for manufacturing certain aftermarket components, for the C-130, E-3 and KC-135R aircraft. Finally, we extended a global strategic maintenance agreement with Saab AB, Support & Services, Regional Aircraft to support operators of all variants of the Saab 340 and Saab 2000 aircraft," added Mr. Labbe.

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FINANCIAL HIGHLIGHTS                       Quarters              Nine months
(in thousands of dollars,            ended Dec. 31,           ended Dec. 31,
 except per share data)            2015        2014         2015        2014
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Sales                            96,561      88,368      289,316     258,862
Adjusted(1) EBITDA               15,666      11,544       43,357      31,882
Net income                        7,010      (1,909)      17,550       4,864
  Per share - diluted ($)          0.19       (0.05)        0.49        0.14
Adjusted(1) net income            7,010       4,361       18,559      11,956
  Per share - diluted ($)          0.19        0.12         0.52        0.34
Weighted-average shares                                                     
 outstanding (diluted, in                                                   
 '000s)                          36,168      36,048       36,099      34,676
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(1)  This is a non-IFRS measure. Please refer to the "Non-IFRS Measures"   
     section at the end of this press release.                             

THIRD QUARTER RESULTS

Consolidated sales reached $96.6 million, compared with $88.4 million in the third quarter of fiscal 2015. This 9.3% increase reflects the strength of the commercial aerospace market, while year-over-year fluctuations in the value of the Canadian currency versus foreign currencies increased third-quarter sales by $11.7 million.

Commercial sales were $50.8 million, up 27.3% from $39.9 million last year. This increase reflects greater content and higher production rates for certain large commercial programs, mainly the B-787 aircraft, and higher sales of landing gear systems designed by Heroux-Devtek resulting from the production ramp-up of the Embraer Legacy 450/500 business jet and Airbus Helicopters EC-175 programs. Year-over-year currency fluctuations had a $6.1 million favourable effect on commercial sales.

Defence sales decreased 5.6% to $45.8 million. The variation was due to lower spare parts requirements and certain delayed deliveries with the U.S. government, a reduction in manufacturing sales to civil customers, as well as lower throughput in the U.K. These factors were partially offset by a $5.5 million favourable foreign exchange impact, higher repair and overhaul sales to the U.S. Air Force and higher engineering sales.

Gross profit reached $18.1 million, or 18.7% of sales, compared with $14.6 million, or 16.5% of sales, last year. The increase reflects favourable year-over-year currency fluctuations equivalent to 2.0% of sales and the lower under-absorption of costs. Adjusted EBITDA stood at $15.7 million, or 16.2% of sales, versus $11.5 million, or 13.1% of sales, a year ago. Last year's adjusted EBITDA excluded non-recurring charges of $7.9 million for the impairment of capitalized development costs on the Learjet 85 program and of $0.6 million for restructuring measures.

Adjusted net income was $7.0 million, or $0.19 per diluted share, in the third quarter of fiscal 2016, up from $4.4 million, or $0.12 per diluted share, in the third quarter of fiscal 2015, excluding non-recurring charges of $6.3 million, net of taxes.

NINE-MONTH RESULTS

For the first nine months of fiscal 2016, consolidated sales totalled $289.3 million, versus $258.9 million in the first nine months of fiscal 2015. Year-over-year fluctuations in the value of the Canadian currency versus foreign currencies increased sales by $31.0 million. Commercial sales rose 26.1% to $152.2 million, while defence sales decreased 0.7% to $137.1 million.

Gross profit for the first nine months of fiscal 2016 amounted to $52.1 million, equivalent to 18.0% of sales, compared with $41.9 million, or 16.2% of sales, in the first nine months of fiscal 2015. Adjusted EBITDA reached $43.4 million, representing 15.0% of sales, up from $31.9 million, or 12.3% of sales, in the previous year. Finally, adjusted net income was $18.6 million, or $0.52 per diluted share, versus $12.0 million, or $0.34 per diluted share, last year.

FINANCIAL POSITION

As at December 31, 2015, Heroux-Devtek's balance sheet remained healthy with cash and cash equivalents of $21.4 million, while total long-term debt was $149.7 million, including the current portion, but excluding net deferred financing costs. Long-term debt includes $74.3 million drawn against the Corporation's authorized Credit Facility of $200.0 million. As a result, the Corporation's net debt position stood at $128.3 million as at December 31, 2015, while the net-debt-to equity ratio was 0.39:1, down from 0.41:1 three months earlier.

UPDATE ON THE B-777 AND B-777X CONTRACT

Heroux-Devtek is making further progress towards meeting the requirements of the long-term contract to supply The Boeing Company ("Boeing") with complete landing gear systems for the B-777 and B-777X aircraft. During the quarter, the Corporation made progress on the customer qualification and approval process of its new plating equipment at the finishing sub-assembly centre in Strongsville, Ohio. While this process is taking more time than planned, management now expects it to be completed in the first quarter of next fiscal year. Heroux-Devtek has received almost all components necessary to deliver the first complete landing gear system and management expects that all manufactured components will be substantially completed in the fourth quarter. Sub-assembly work has started in Strongsville, Ohio, and the Corporation is completing the installation of all tooling and equipment at the final assembly facility in Everett, Washington.

Management remains confident that delivery of the pre-production shipset to Boeing will occur as planned in mid-calendar 2016 and that production requirements associated to deliveries scheduled to begin in early calendar 2017 will be met. As at December 31, 2015 the Corporation had made capital investments of $105 million, representing more than 90% of the total investment associated to this contract.

OUTLOOK

Conditions remain mostly favourable in the commercial aerospace market. In the large commercial aircraft segment, Boeing and Airbus are proceeding with production rate adjustments ahead of introducing certain more fuel efficient aircraft variants, on several leading programs through calendar 2019. Their backlogs remain strong, representing approximately eight and ten years of production at current rates, respectively. In the business jet market, the current and future production ramp-up of business jet models for which Heroux-Devtek has designed the landing gear should provide sustained growth for the Corporation for several years. In the defence aerospace market, the recent budget agreement provides additional funding for the U.S. Government's next two fiscal years, but uncertainty remains beyond that period given the need to address the deficit. The Corporation's U.K. operations provide Heroux-Devtek with a more geographically diversified defence portfolio, which reduces its relative exposure to the U.S. market. The balance between new component manufacturing and aftermarket products and services in the Corporation's defence portfolio and its leading program content also promote stability.

As at December 31, 2015, Heroux-Devtek's funded (firm orders) backlog stood at $442 million, versus $427 million three months earlier.

"Looking ahead, the fourth quarter has historically been our strongest period and this fiscal year should be no exception. Given forces driving our main markets, as well as favourable currency variations, we expect to conclude fiscal 2016 with sales growth of approximately 10%, including a solid increase in commercial sales and relatively stable defence sales. Beyond this horizon, we are focussed on executing our strategic plan to further enhance Heroux-Devtek's reach in the global landing gear market. Our proven ability to carry out large-scale mandates, combined with our fully-integrated world-class capabilities, provide a solid foundation to capture additional business opportunities and to create sustainable value for shareholders," concluded Mr. Labbe.

CONFERENCE CALL

Heroux-Devtek Inc. will hold a conference call to discuss these results on Friday, February 12, 2016 at 10:00 AM Eastern Time. Interested parties can join the call by dialling 1-877-223-4471 (North America) or 1-647-788-4922 (overseas). The conference call can also be accessed via live webcast at Heroux-Devtek's website, www.herouxdevtek.com/investor-relations/events or www.gowebcasting.com/7144.

If you are unable to call in at this time, you may access a tape recording of the meeting by calling 1-800-585-8367 and entering the passcode 5915418 on your phone. This tape recording will be available on Friday, February 12, 2016 as of 1:00 PM Eastern Time until 11:59 PM Eastern Time on Friday, February 19, 2016.

PROFILE

Heroux-Devtek Inc. (TSX:HRX) is an international company specializing in the design, development, manufacture and repair and overhaul of landing gear and actuation systems and components for the Aerospace market. The Corporation is the third largest landing gear company worldwide, supplying both the commercial and defence sectors of the Aerospace market with new landing gear systems and components, as well as aftermarket products and services. The Corporation also manufactures hydraulic systems, fluid filtration systems and electronic enclosures. Approximately 75% of the Corporation's sales are outside Canada, including about 50% in the United States. The Corporation's head office is located in Longueuil, Quebec with facilities in the Greater Montreal area (Longueuil, Laval and St-Hubert); Kitchener, Cambridge and Toronto, Ontario; Springfield and Strongsville, Ohio; Wichita, Kansas; Everett, Washington; and Runcorn, Nottingham and Bolton, United Kingdom.

FORWARD-LOOKING STATEMENTS

Except for historical information provided herein, this press release may contain information and statements of a forward-looking nature concerning the future performance of the Corporation. These statements are based on suppositions and uncertainties as well as on management's best possible evaluation of future events. Such factors may include, without excluding other considerations, fluctuations in quarterly results, evolution in customer demand for the Corporation's products and services, the impact of price pressures exerted by competitors, and general market trends or economic changes. As a result, readers are advised that actual results may differ from expected results.

NON-IFRS MEASURES

Earnings before interest, taxes, depreciation and amortization ("EBITDA"), adjusted EBITDA, adjusted net income and adjusted earnings per share are financial measures not prescribed by International Financial Reporting Standards ("IFRS") and are not likely to be comparable to similar measures presented by other issuers. Management considers these to be useful information to assist investors in evaluating the Corporation's profitability, liquidity and ability to generate funds to finance its operations. Refer to Non-IFRS financial measures under Operating Results in the Corporation's MD&A for definitions of these measures and reconciliations to the most comparable IFRS measures.

Note to readers: Complete unaudited interim condensed consolidated financial statements and Management's Discussion & Analysis are available on Heroux-Devtek's website at www.herouxdevtek.com.

Contacts:
From:
Heroux-Devtek Inc.
Gilles Labbe
President and Chief Executive Officer
(450) 679-3330

Contact:
Heroux-Devtek Inc.
Stephane Arsenault
Chief Financial Officer
(450) 679-3330

MaisonBrison
Martin Goulet, CFA
(514) 731-0000